Herding Behavior

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Qualitative Research in Financial Markets
Emerald Article: Herding, information uncertainty and investors' cognitive profile Beatriz Fernández, Teresa Garcia-Merino, Rosa Mayoral, Valle Santos, Eleuterio Vallelado

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To cite this document: Beatriz Fernández, Teresa Garcia-Merino, Rosa Mayoral, Valle Santos, Eleuterio Vallelado, (2011),"Herding, information uncertainty and investors' cognitive profile", Qualitative Research in Financial Markets, Vol. 3 Iss: 1 pp. 7 - 33 Permanent link to this document: http://dx.doi.org/10.1108/17554171111124595 Downloaded on: 18-12-2012 References: This document contains references to 62 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 941 times since 2011. *

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Beatriz Fernández, Teresa Garcia-Merino, Rosa Mayoral, Valle Santos, Eleuterio Vallelado, (2011),"Herding, information uncertainty and investors' cognitive profile", Qualitative Research in Financial Markets, Vol. 3 Iss: 1 pp. 7 - 33 http://dx.doi.org/10.1108/17554171111124595 Beatriz Fernández, Teresa Garcia-Merino, Rosa Mayoral, Valle Santos, Eleuterio Vallelado, (2011),"Herding, information uncertainty and investors' cognitive profile", Qualitative Research in Financial Markets, Vol. 3 Iss: 1 pp. 7 - 33 http://dx.doi.org/10.1108/17554171111124595 Beatriz Fernández, Teresa Garcia-Merino, Rosa Mayoral, Valle Santos, Eleuterio Vallelado, (2011),"Herding, information uncertainty and investors' cognitive profile", Qualitative Research in Financial Markets, Vol. 3 Iss: 1 pp. 7 - 33 http://dx.doi.org/10.1108/17554171111124595

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Herding, information uncertainty and investors’ cognitive profile ´ Beatriz Fernandez, Teresa Garcia-Merino, Rosa Mayoral, Valle Santos and Eleuterio Vallelado University of Valladolid, Valladolid, Spain

Abstract
Purpose – The purpose of this paper is to analyze the interaction between the availability of financial information and individuals’ cognitive profiles to explain investors’ herding behavior. Design/methodology/approach – The authors designed and conducted an experiment to observe the behavior of subjects in three settings, each with a different level of information. Findings – Results confirm that a dependence relation exists between information, investors’ behavioral biases and the herding phenomenon. Moreover, the experiment shows that information concerning the number of previous transactions in the market is particularly relevant to explain herding propensity among investors. The findings indicate that the cognitive profile of investors is more relevant as the availability of information increases and the number of previous transactions in the market is low. Research limitations/implications – Future research should examine further the best way to...
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